Although the manufacturing sector of the U.S. economy grew for the fortieth consecutive month in September, the pace was slower, reveal data released Oct. 2 by the Institute for Supply Management (ISM). Its index of manufacturing activity fell 1.6 percentage points to 52.9% in September from 54.5% in August. A figure above 50% indicates the manufacturing sector is growing; a figure below 50% signals it is contracting.
New manufacturing orders continued to grow in September, but the pace was unchanged from August at 54.2%. Production also grew in September, but the pace was half a point slower at 56.1%. Manufacturing employment contracted in September, with that index falling to 49.4% in September from 54% in August. And inventories contracted as well, with that index falling 3.8 percentage points to 46.4% in September from 50.2% in August.
"It's apparent that manufacturing is losing momentum and feeling the effects of higher interest rates and a weaker housing market," says Norbert J. Ore, chairman of ISM's manufacturing business survey committee.
"After scrambling to add inventories earlier this year amid supply disruptions, inventories are now being pared back -- particularly in the motor vehicle sector," says Daniel J. Meckstroth, chief economist at Manufacturers Alliance/MAPI, an Arlington, Va.-based business and public policy research group. "Housing construction activity is declining, and the growth in equipment demand is probably slowing from an unsustainably fast pace," he adds.